Child and dependent care credit: 2025 and 2026 rates, and a calculator

Which year are you filing?

Credit rates for 2025 and 2026

The rate is a percentage of up to $3,000 in care costs for one child, or $6,000 for two or more. It depends on your adjusted gross income (AGI). In 2026 it falls 1 point for each $2,000 (or part of $2,000) of AGI above $15,000 until it reaches 35%, then, above $75,000 ($150,000 on a joint return), 1 point for each $2,000 ($4,000 joint) until it reaches 20%.

At AGI of $15,000 or less, anyone taking the standard deduction owes no federal income tax, so the 50% rate pays nothing; the practical maximum comes at somewhat higher incomes (our calculation). Sources: 26 U.S.C. §21 as amended by Pub. L. 119-21 §70405; the rate table in the IRS draft 2026 Form 2441 instructions (Aug 2026); IRS Publication 503 (2025). Some tax sites print $45,000, $105,000 and $210,000 as the 2026 break points; the IRS table puts them at $43,000, $103,000 and $206,000, because any part of $2,000 counts as a full step.

Calculator: your credit

Who gains in 2026

The same families, the same costs, 2025 vs. 2026 federal credit (no FSA, standard deduction, all income from pay), and what the 2026 credit is worth once the child tax credit is figured (children in care also get the child tax credit):

The biggest change is in the middle: the rate for AGI between $43,000 and $150,000 on a joint return ($75,000 for others) rises from 20% to 35%, worth $450 more with one child or $900 more with two or more for families who spend at least $3,000 (one child) or $6,000 (two or more) and owe enough tax to use it. A married couple with two children needs AGI of about $53,000 to use the full $2,100, and about $62,000 before all of it actually lowers their tax bill, because the child tax credit is figured after this credit. Above $206,000 on a joint return ($103,000 for others) nothing changes. The 50% rate almost never pays out: at the incomes where it applies, families taking the standard deduction owe no federal income tax, and the credit isn’t refundable. By our calculation, a married couple earning $40,000 with two children in care would be entitled to $2,220 in 2026 but owes only about $780 in tax, so that’s all the credit can wipe out, and the child tax credit would have wiped out that tax anyway, so the care credit ends up worth nothing to them (Tax Policy Center on why low-income families get little from it; Schedule 8812 instructions on the order of the credits). Some of these families even get a little less in 2026: the higher 2026 standard deduction lowers the tax they owe, and the credit can’t exceed it.

Who can claim it

• A qualifying person: a child under 13 whom you claim as a dependent (your child, stepchild or foster child, or a sibling or a descendant of one) when the care was given (only costs before the 13th birthday count), or a spouse or dependent of any age who can’t care for themselves and lived with you more than half the year.
• An ID number for each child: usually a Social Security number; an ITIN or adoption ATIN also works for this credit.
• Work: you paid for care so you, and your spouse if married, could work or look for work. Extra care for a date night or a day off doesn’t count, but a short absence (two weeks or less) doesn’t reduce a weekly or monthly fee you pay anyway.
• Earned income: the costs counted can’t be more than your pay, or the lower-earning spouse’s pay. A spouse who was a full-time student for some part of each of 5 calendar months, or unable to care for themselves, is treated as earning $250 a month ($500 with two or more qualifying people).
• Married? File jointly. If you file separately, you can claim it only if you’re treated as unmarried: your spouse didn’t live with you for the last six months of the year, the child lived with you more than half the year, and you paid more than half the cost of keeping up the home (you can then usually file as head of household). A couple legally separated by a court decree isn’t treated as married.
• Divorced or separated: only the custodial parent (the one the child lived with for more nights) can claim it, even if the other parent claims the child as a dependent.
• The provider: you must name everyone who provided care and give their taxpayer ID (see below). You can’t count payments to your spouse, the child’s other parent, your child under 19, or anyone you claim as a dependent.

Source: IRS Publication 503.

What counts as a care cost

Source: IRS Publication 503 and the draft 2026 Form 2441 instructions. A center caring for more than six children counts only if it follows state and local rules; check its license.

If you have a dependent care FSA

Every dollar of tax-free dependent care benefits (from a dependent care FSA or your employer, in box 10 of your W-2) is subtracted from the $3,000 or $6,000 the credit can count. In 2026 the FSA limit rises to $7,500, which is more than the $6,000 credit limit, so a family that uses the full FSA gets no credit at all, even with two or more children. In 2025 a $5,000 FSA left $1,000 of costs for the credit with two or more children.

Which is better depends on your income: the FSA also skips Social Security and Medicare taxes, while the credit is worth 35% or more for many families in 2026. Our FSA calculator compares the two →

Claiming it: Form 2441

1. Part I: who provided care

   List each provider’s name, address, taxpayer ID (an employer identification number for a center, often a Social Security number for a home provider) and what you paid. Churches and other tax-exempt providers can be listed as “Tax-Exempt”.

2. Part II: the credit

   List each child, your costs, your pay and your spouse’s pay. The form keeps the smallest of your costs, the $3,000 / $6,000 limit and the lower pay, multiplies it by the rate for your AGI, then limits the result to your federal income tax.

3. Part III: employer benefits

   If box 10 of your W-2 shows dependent care benefits, fill in Part III first: it works out how much is tax-free and how much of the credit limit is left.

4. Attach it to Form 1040

   The credit goes on Schedule 3. Keep receipts showing the dates of care and what you paid.

Form 2441 and instructions · draft 2026 form · IRS Tax Topic 602

Getting your daycare’s tax ID

Ask your provider to fill in Form W-10, or use the tax ID on a signed receipt or statement from them. Many centers give parents a year-end statement with the number on it. If a provider won’t give you its number, fill in what you have, write “See Attached Statement” on the lines you can’t complete and attach a note explaining that you asked. If you can show you made a real effort, you can still claim the credit.

The tax ID isn’t public, but a center’s licensed name, operator and address are. Look them up on its page here, which also shows its inspection record: Texas · California · Pennsylvania · search by name.

State credits: Texas, California and Pennsylvania

Texas has no state income tax, so there’s no state credit.

California has a nonrefundable child and dependent care expenses credit (FTB 3506) for federal AGI of $100,000 or less, and only for care given in California. It’s figured like the old federal credit (35% falling to 20% above $43,000), then California pays 50% of that if AGI is $40,000 or less, 43% up to $70,000, and 34% up to $100,000: at most $525 for one child and $1,050 for two or more. Tax-free benefits up to $5,000 reduce it (California didn’t adopt the $7,500 FSA limit). California also can’t count more costs than the federal form does, so if the 2026 form keeps that rule, a $7,500 FSA leaves no California credit either. California hasn’t adopted the 2025 federal tax law, so unless the Legislature acts, expect the same rules for 2026; the 2026 form isn’t out yet (FTB; 2025 FTB 3506 instructions; FTB on SB 711).

Pennsylvania’s Child and Dependent Care Enhancement credit equals 100% of the federal credit figured on Form 2441 (line 9a, before the federal tax limit), and it’s refundable, so it’s paid even when it’s more than the Pennsylvania tax you owe. For 2025 that means $600 to $1,050 for one child and $1,200 to $2,100 for two or more, if you spent at least $3,000 for one child or $6,000 for two or more. Schedule DC also caps it by your Pennsylvania taxable income: $1,050 / $2,100 at $43,000 or less, $600 / $1,200 above (Pennsylvania taxes 401(k) contributions, so its income can be higher than your federal AGI). Claim it on Schedule DC with your PA-40, and attach Form 2441 and Schedule 3; fill in Form 2441 through line 9a even if your federal credit is limited to $0. Because it starts from the federal figure, a family whose FSA uses up the federal limit gets no Pennsylvania credit either. For 2026, Pennsylvania doesn’t automatically follow the federal increase; SB 1382, which would match it, was referred to the Senate Finance Committee in June 2026 (Pa. Dept. of Revenue; DOR, March 2025; Sen. Collett, June 2026; SB 1382 status).

Other states: many have their own credit, often a percentage of the federal one. Check your state’s tax agency, and whether it follows the 2026 federal change.

What daycare costs, and how much the credit covers

Full-time care at a licensed center for a year, and the share a 35% credit covers (2026, joint AGI $43,000 to $150,000): $1,050 for one infant, $2,100 for an infant and a preschooler.

Texas: 2026 Texas Child Care Market Rate Survey, statewide median daily rate × 260 days. California: 2021 state survey adjusted to August 2026 prices, counties weighted by population. Pennsylvania: median daily rate 3,803 certified centers list in COMPASS × 260 days. U.S. average: National Database of Childcare Prices, in today’s prices. Because the $3,000 and $6,000 limits have been the same since 2003 (except for 2021) while prices kept rising, the credit covers a small share of a year of care.

Common questions

More guides

Changes

• Oct 11, 2026: First published, with the 2025 and 2026 rates, a calculator and the California and Pennsylvania credits.